E9-20710. Foreign-Trade Zone 134 - Chattanooga, TN, Application for Manufacturing Authority, Volkswagen Group of America Chattanooga Operations, LLC (Motor Vehicles), Chattanooga, TN

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Chattanooga Chamber Foundation, grantee of FTZ 134, pursuant to Section 400.28(a)(2) of the Board's regulations (15 CFR Part 400), requesting authority on behalf of Volkswagen Group of America Chattanooga Operations, LLC (VGACO) to produce light-duty passenger vehicles under FTZ procedures within FTZ 134. It was formally filed on August 19, 2009.

The VGACO facility (1,187 acres, 2.1 million sq.ft.) is located at 7351 Enterprise South Boulevard within the Enterprise South Industrial Park in Chattanooga (Hamilton County), Tennessee (Site 3). The facility (approximately 2,000 employees), currently under construction, will be used to produce passenger sedans, sport utility vehicles, and minivans for export and the domestic market. At full capacity, the facility will manufacture up to approximately 150,000 vehicles annually. Components to be purchased from abroad (representing about 25% of total material inputs, by value) would include: paint and varnish, zinc coating, sealants, grease/lubricating agents, adhesives, motor oil, transmission fluid, fuel additives, anti-freeze, tubing, flexible rubber tubes/hoses, self-adhesive plastic or polyurethane sheets/foil/film, labels, sealing tape, plastic bags, articles of plastic (incl. handles, grips, knobs, locks, seals, o-rings, caps), articles of rubber (incl. belts, tubes, hoses, dampeners, grommets, plugs, mountings), tires, gaskets, seals, floor mats, leather bags, man-made fiber and cotton bags/cases (HTSUS categories 4202.12.8030, 4202.12.8070, 5608.19, 6305.20; will be admitted to the zone under privileged foreign status (19 CFR § 146.41) or domestic (duty paid) status (19 CFR § 146.43)), leather articles, wood boxes, printed materials, nets, carpet sets, safety glass, glass lenses, mirrors, car covers, heat deflectors, tube/pipe fittings, pins, hangers, body parts, trim parts, articles of base metals, doors, fasteners, cotter pins, helical springs, clamps, articles of aluminum, hand tools, catalytic converters, locks and keys, spark-ignition and diesel engines, engine parts, pumps, compressors, air conditioner components, turbochargers, cooling boxes, filters, valves, parts of steering systems, steering wheels, hubs and flanges, chain, universal joints, clutches, half/drive shafts, transmissions and parts thereof, torque converters, differentials, bearings and parts thereof, compasses, thermostats, motors, batteries, ignition parts, electrical parts, lighting equipment, horns, windshield wipers, electric heaters, cameras, audio/video components, speakers, antennas, wiring harnesses, seats, seat belts, airbag modules/inflators, brake components, wheels, wheel locks, lug nuts, lug wrenches, suspension components, radiators, heater cores, exhaust systems, hinges, pneumatic dampeners, speedometers, tachometers, voltmeters, flow meters, anti-theft systems, regulators/controllers, sensors, resistors, relays, starters, electrical components, cigarette lighters, clocks, spark plugs, and switches (duty rate range: free 20%). The application also requests authority to include a broad range of inputs and finished motor vehicles that VGACO may produce under FTZ procedures in the future. New major activity involving these inputs/products would require review by the FTZ Board.

FTZ procedures could exempt VGACO from customs duty payments on foreign components used in export production (estimated to be 20% of plant shipments). On its domestic sales, VGACO would be able to choose the duty rate that applies to finished passenger vehicles (2.5%) for the foreign inputs noted above that have higher rates. Certain logistical/supply chain management savings would also be realized through FTZ procedures. Customs duties also could possibly be deferred or reduced on foreign status production equipment. The application indicates that the savings from FTZ procedures would help improve the facility's international competitiveness.

In accordance with the Board's regulations, Pierre Duy of the FTZ Staff is designated examiner to evaluate and analyze the facts and information presented in the application and case record and to report findings and recommendations to the Board.

Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the following address: Office of the Executive Secretary, Room 2111, U.S. Department of Commerce, 1401 Constitution Avenue, NW, Washington, DC 20230-0002. The closing period for receipt of comments is October 26, 2009. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to November 10, 2009.

A copy of the application will be available for public inspection at the Office of the Foreign-Trade Zones Board's Executive Secretary at the address listed above and in the “Reading Room” section of the Board's website, which is accessible via www.trade.gov/​ftz. For further information, contact Pierre Duy at [e-mail] or [phone].

Dated: August 20, 2009.

Andrew McGilvray,

Executive Secretary.